With Do Not Pay system, agencies share info to stop improper payments

Oct. 12, 2012 - 02:17PM
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Recently passed legislation that President Obama is expected to sign into law will improve agencies’ ability to stop benefits, contract and grant dollars from going to dead people or suspended companies, experts say.

Separate bills — one that passed the Senate and another that is awaiting action on the House floor — would require agencies to use the Treasury Department’s Do Not Pay system, which centralizes procurement, grant and benefit-issuing staffs’ access to at least seven databases. Through the system, agencies can match names of federal beneficiaries, grant and loan recipients, and contractors against those in databases such as the Excluded Parties List System, which identifies suspended or debarred companies, and the Social Security Administration’s list of people who have died.

Until now, agencies have been directed by the Office of Management and Budget to create plans to use the Do Not Pay system but are not required to do so.

The Senate approved its bill in August. The House Oversight and Government Reform Committee passed a similar bill in September. Congressional sources say one of the bills will likely be approved by both chambers when Congress returns in November without having to go through a conference committee.

A key benefit of the legislation is that it would amend federal law so that agencies can more easily share information about the people who receive financial assistance and contracts, said Wendy Morris, a director with financial consulting firm MorganFranklin.

Currently, agencies can only disclose information in computer-matching programs such as Do Not Pay through agreements with one another. That would require Treasury to create an agreement with each agency and then those agencies would have to create agreements with each other to exchange information on Do Not Pay. The legislation would allow Treasury to create one agreement for multiple agencies to use the Do Not Pay list.

Sharing data would help prevent the problem Morris faced 10 years ago as a consultant for a federal agency that was trying to help the government stop improper pension payments to deceased individuals. When she asked why agencies didn’t just use SSA’s so-called “death file,” she was told it would take an act of Congress to share that data across government, she said.

“Ten years later, here we are: The Do Not Pay solution, with all these data sets, hungry for others, and they’re going through the effort to clear those obstacles to allow that data to be shared amongst federal agencies,” she said.

The administration predicts that use of the Do Not Pay portal will help achieve a goal of reducing improper payments by $50 billion, from $120.6 billion in 2010 to roughly $70 billion this year.

Between 20 and 30 agencies are now using the portal, said Kevin Jones, executive director of the Do Not Pay program.However, a challenge remains: The government has no way to track how effective the program is. That is because it is still developing a way to track how agencies are preventing improper payments, Jones said.

There is anecdotal evidence that the program is making a difference, Jones said, but he is not yet satisfied with the data he has seen concerning the program’s effectiveness.“We’re working very hard to understand how we can do that better,” he said last week.

Another part of Congress’ push to stop improper payments includes improving the quality of information entering the Do Not Pay system, experts said.

For example, SSA’s death file does not include 1.2 million people who died between 1980 and 2010, the SSA inspector general said in a report earlier this year. The House and Senate bills would require the OMB director to create a plan to improve the accuracy and timeliness of SSA’s death data.

Agencies also would be required under the bills to publicly report high-priority programs that are at greatest risk of improper payments, plans to recover improper payments and how they intend to prevent improper payments in the future.

Other databases with noted integrity problems to be included in the Do Not Pay system were not addressed by the bills. But the increased use of the Do Not Pay system will likely spur improvements to data quality across government, Morris said.

“Do Not Pay is not going to make that data better,” she said, “but the more people using it, the more pressure there will be for the owner of that data to make it better.”

Agencies submitted final plans to OMB last month outlining how they will use the Do Not Pay system. OMB officials declined requests to discuss agencies’ proposals or early pilots of the system until agency plans are finalized.